Microsoft set to challenge the iPod

Microsoft set to challenge the iPod

Summary: So, what does Microsoft need to do better than Apple in order to get a good foothold in this market? Well, let's take a look at why the iPod is such a success.

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TOPICS: Apple
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So the rumors were true.  Microsoft has been planning a hand-held media player The iPod has been a marketing success, becoming an icon of all that's hip and cooland expects to have it hit the stores in time for the holiday spending extravaganza.  On top of that, Microsoft has been negotiating with record companies and television networks in order to hammer out terms that will allow them to sell music and video content.

Details are sketchy on this player and nobody is confirming anything, but one feature that the Microsoft player will have that the iPod currently doesn't is wireless connectivity.  Is adding WiFi support to enough for Microsoft to even begin to erode the dominance that the iPod has in the digital player market?  It's a start, but it's not enough.  Not by a long shot.

So, what does Microsoft need to do better than Apple in order to get a good foothold in this market?  Well, let's take a look at why the iPod is such a success.

  • A big factor that has contributed to the success of the iPod has been iTunes - a virtual place where people can visit, search for what they want, find it, pay a cut-down price and then download their purchased items onto their iPod.  The process is fast, simple and cheap. 
  • To top that, the iPod has been a marketing success, becoming an icon of all that's hip and cool.  The iPod has also survived numerous challenges, ranging from battery issues, scratches, high prices, accusations that Apple used slave labor, and numerous lawsuits.  No matter what, people love the iPod. 
  • The iPod has also killed off a lot of the competition and resulted in the remaining competitors fighting it out for an ever-decreasing market share. 
  • Despite shipping a player that is both over-priced and has fewer features than the competition, more and more people are choosing the iPod.

So, if the Microsoft digital player has any chance of becoming an "iPod killer", Microsoft has a number of challenges to overcome:

  • It has to build an "iTunes 2.0".  This will have to be better than iTunes in every way - cheaper, easier to use, better range of titles.  Everything.
  • Marketing is key.  Microsoft is going to have to target the same market that currently buys an iPod.  Forget being cheap, that market is already dead.  Forget about packing every feature possible into the box, most users only want basic features.  The iPod market is made up of people who want to buy a lavish gift for themselves or others.  A market that says "yep, I know I paid over the odds for this, but I don't care because I'm/they're worth it".  Microsoft will need to turn the purchase into an experience - that means a great deal of attention to packaging, presentation and no expense spared in making the customer feel special. 
  • Microsoft could learn a lot from Apple's mistakes and also Apple's successes.  Quality is going to be key.  Good, robust design, excellent battery life, easy to use interface.  Mess up on any of these and the idea goes down the tube. There's no room for mistakes (Microsoft - if you're looking for a beta tester ... :-).
  • Microsoft's going to have to be committed to being in this for the long haul.  Displacing Apple's dominance could take years. 

Thoughts?  If you're an iPod user, what would make you shift sides?  If you're not an iPod user, what would make you want to buy a Microsoft device?

[Updated: July 6, 2006 @ 9:17 am]
Engadget have some more details on this new digital media player and the services that Microsoft are planning around it.  Most interesting is this:

"But it gets better. To attract current iPod users Microsoft is going to let you download for free any songs you've already bought from the iTunes Music Store. They'll actually scan iTunes for purchased tracks and then automatically add those to your account. Microsoft will still have to pay the rights-holders for the songs, but they believe it'll be worth it to acquire converts to their new player."

If that's true, that's really aggressive.

Topic: Apple

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20 comments
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  • Music players, again?

    Don't these big corporations realize that there are some people that don't play music 24/7? When are they going to put out some book readers? And I don't mean scrolling text. I'd like to see some portable iPod-type devices that you download your book into, and then it reads it to you. That has got to be a big untapped market that someone should get into.
    m-nature
    • Now that would be sweet!

      :-)
      Adrian Kingsley-Hughes
    • Already there

      ---I'd like to see some portable iPod-type devices that you download your book into, and then it reads it to you---

      There is such a device. It's called an iPod. You buy audiobooks, download them to your iPod and it reads them to you.
      tic swayback
      • I mean a book reader

        ... as eBook reader ...
        Adrian Kingsley-Hughes
        • eBooks are such a scam

          Believe me, I work for a publisher. Who wants to pay full cover price for an electronic version of a book that's less portable, harder to read, less durable, and loaded down with DRM so you can't lend it to a friend or sell it at the used book store?

          I don't see any advantage in carrying around an eBook reader to carrying around a paperback. Sure, you can carry your whole library with you at once, but how often do you need to read more than one book at a time? Great for students doing research I suppose, but not so great if you drop it in the sand at the beach or in the tub.
          tic swayback
          • From looking at my royalty statements ...

            "Who wants to pay full cover price for an electronic version of a book that's less portable, harder to read, less durable, and loaded down with DRM so you can't lend it to a friend or sell it at the used book store?"
            No many people!
            Adrian Kingsley-Hughes
          • Give it Time

            I'll have to disagree with you here. The romance of the book
            object is firmly embedded but the slow change to electronic
            distribution is inevitable.

            As someone who grew up in Northern Canada, I've seen the
            logging roads built, the forests harvested, the pulp shipped and
            made into paper. The human and environmental resources that
            are committed to the morning paper are staggering. The larger
            emerging issue is energy. Electronic distribution uses a fraction
            of the energies required to create and distribute traditional
            books. The attempts to maintain higher costs with web
            distribution are artificial and will inevitably be broken with new
            business models. Readers will gradually improve and become
            smaller and better with power.

            What we see with iTunes is a massive threat to traditional modes
            of content dissemination.

            Digital cameras have replaced film in the last 2 years. Purist
            photographers are the new anachronisms. The arguments
            regarding image fidelity are steamrollered as digital fidelity
            steadily improves. We are made to understand that in the
            abstract, fidelity in the digital realm is not bound by the physical
            attributes of film and is potentiallly limitless.

            Similarly, it is a publishers responsibility to start the transition to
            electronic distribution, or step aside and let someone else do it.
            The energy gains can't be ignored. A such fair DRM becomes the
            axis on which the new business model turns. It is a simple
            enabler of the value proposition and the transaction, it is not a
            weapon, we needn't accept any DRM'd deal and if we are
            cheated, we respond accordingly. I would never rule out the
            honor system as a possible solution and I think that experiment
            should take place, but if fair use is abused as it has in the past,
            it is a content creator's right to secure the product or to not
            produce it at all.
            Harry Bardal
          • Harry

            Where did you say your blog is located?

            This is all [i]very[/i] good!

            If you don't have one, now is the time. :)
            Go Man Go!
            D T Schmitz
          • ZDNet--sign him up!

            Harry is without a doubt, the most eloquent and funniest poster on ZDNet, probably the most insightful as well.

            Sign him up ZDNet, give the man his own blog!
            tic swayback
          • Stuck on cold posts

            When deciding which institutional juggernauts to contribute to, I
            always ask myself one simple question, "what would a eskimo
            assassin do?". Sadly neither the blogoshere or bastion of Windows
            IT passes the eskimo assassin test. Just as when I was a youngster
            up north, I find myself with my toungue out, stuck on cold posts.
            Harry Bardal
          • Speaking of time...

            Ink on paper is an interface that has stood the test of time. It's one of the oldest, longest lasting interfaces we have. We have intact books that date back to the time of the Pharoahs. Obviously, there's something so good about this as an interface that has caused it to last so long. I think it's in the high resolution, the low cost, the portability, the durability, etc. eBooks can never hope to match all of these characteristics. If you buy an eBook today, what are the odds you'll be able to read it in 10 years, let alone 1000 years?

            The two big obstacles to overcome, as I can see them are 1) price and 2) DRM. Price is a big problem now. Sony has their new totally cool electronic paper, but so what, I'm not going to spend $400 to buy a reader that doesn't do anything for me that a $5 paperback already does. Why spend all that money just so you can continue to buy books at the same price you now pay for them?

            And then the DRM comes into play. If I spend $400 for the Sony device, what if it won't use the DRM for the book I want to read? Like the iPod, each manufacturer is going to push their own system to try to corner the market, thus screwing readers who want books from different publishers. And even if we get universal DRM, the product is vastly less useful than a book. I can't lend it to a friend. I can't sell it at the used bookstore. Yet they're going to charge you at least as much as you pay for the paper copy.

            While I do see this eventually coming to pass, it's not going to happen for a long time. I think it's going to take 1) a big technological breakthrough creating small hand held readers that are very high resolution AND very inexpensive, and 2) a societal shift, once this DRM nonsense settles down and we can get on with business.
            tic swayback
  • iWhat?

    What is this [i]iPod[/i] of which you speak? ;)

    BTW, do the 'Record' companies make [i]Records[/i] anymore? I was looking around and haven't been able to locate a good source of LPs and 8-track tapes.

    Anybody? Beuler? :)
    D T Schmitz
    • Don't know about 8-tracks

      but the Virgin Megastore in Times Square has LPs.
      Michael Kelly
      • Fantastique! I'll check that out!

        (nt) ;)
        D T Schmitz
    • What are these records of which you speak!

      ;-)
      Adrian Kingsley-Hughes
  • One and only one reason I'd switch

    The only way anyone will switch me off the iPod (no, I don't use the iTunes store) would be setting up an ecosystem with a DRM-free store. Otherwise, why bother?

    MS has never been very good with user interfaces, which is something you don't really get into in your article. They can get away with Windows being kludgey--people expect computers to be difficult. But for a portable music device, slick and easy are absolute musts. And the iPod has that down. It'll be interesting to see if MS can get anywhere close, given their history of design.

    There's also no way an MS store will be any cheaper than iTunes. No way will the RIAA allow songs to be sold for less than 99 cents. They're already furious that this is the standard price and feel it's way too low (they want new songs to sell for closer to $2.99 per song). So any licensing terms are certainly going to set a minimum price. Also, given the lessons they've learned from Apple's growing power, expect them to hold MS over a barrel, and give them much worse terms for licensing.

    Wireless? Eh. How often do you need to have a song so badly that instant that you can't wait to plug into a computer?
    tic swayback
    • other requirements to switch

      Migration. Everything on my iPod needs to be portable to any new device. Especially the 300 or so CDs that I've ripped from my CD library.

      Better selection. I listen to a lot of classical, and most of the classical I listen to is outside the standard repertoire. I also want easier access to video content, like being able to rip a DVD into my iPod (or iPod replacement). The device's UI needs to be able to cope with the DVD menus.

      Better UI. iPod lacks in some basic ways, such as fast-forward and fast-reverse. iPod and iTunes are terrible for organizing a classical music library, and the Gracenotes database is highly inconsistent about how classical artists and composers are identified on classical CDs. In general, iPod is lousy for organizing and accessing [i][b]any[/b][/i] large music library--iPod may hold 15,000 songs, but how do you find what you want?

      On an iPod-sized device, I really don't care about reading, though. The Origami-sized PC is about the smallest screen I'd want for a good reading experience.
      diane wilson
      • One more...

        Good points.

        I'd add in the availability of higher quality audio, lossless versions of cd tracks, rather than the lossy 128 kbps versions available online. And no, I'm not gonna pay more for these than I would pay per track on a cd.
        tic swayback
    • Podcasts

      "Wireless? Eh. How often do you need to have a song so badly that
      instant that you can't wait to plug into a computer?"

      I would be thrilled if the iPod could update Podcasts itself off a
      802.11 network.
      Benton Rich
  • Buying vs Owning: The New Cycle

    Esther Dyson has it right, consumers are tired of choice. What
    has been sold for the last 12 years is not the device itself, but
    the shopping experience. The notions of choice and and
    abundance were for sale, the player was the prize in the cracker
    jack box.

    The market has cycled and Microsoft's ship has left without
    them. As usual, they are too slow on the uptake.

    The premise that Microsoft can move in and secure dominance
    as they did in the 90's is nothing but sentiment and nostalgia.
    I'd suggest booting the 486 and playing Wing Commander as an
    antidote.

    People are starting to get it. Regardless which device they
    choose outside the iPod ecosystem?it has the same brain. It uses
    a Microsoft codec and depends on a Microsoft DRM. So Microsoft
    can try to mimick the iPod and embarass themselves in the
    process, but it still won't work, for two important reasons. The
    first reason is that Microsoft has shown itself to be consistantly
    mediocre when producing integrated experiences. The XBox is
    the marginal exception, but that takes us back to Wing
    Commander. Microsoft was always seen as the facilitator of
    games on the PC and this is an extension, and a nod to the
    gaming fanboys that owe their arrested development to Doom.
    With PS3 in the wings the jury is still out. The second reason is
    trust. Microsoft has abused consumer trust repeatedly. People
    are simply not inclined to trust them with their music
    collections.

    They have endorsed Apple to even the field somewhat. The
    experience has been largely positive. They are inclined to
    expand it.

    It's not about shopping and consumerism anymore, it's about
    ownership and authorship. This article is naive enough to posit
    that MS might, after multiple tries, take market share from
    Apple. The real question should be, in what other areas will
    Apple take share from Microsoft. Another spin job from the folks
    that bring you Windows IT is to be expected I suppose. They
    would do better to wax poetic about the whistful days of WC
    though.
    Harry Bardal